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MABSMoney ManagementGuide for budgeting and

dealing with debt

MABS Money A4 to A5 31.3.16:Money management guide 31/03/2016 15:49

MABS

The Money Advice and Budgeting Service (MABS), funded and supported by the CitizensInformation Board, is a free, confidential, independent, non-judgemental and non-profitmaking service for people in debt or at risk of getting into debt. There are 62 officesnationwide staffed by trained money advisers, who:

• Provide a confidential, independent and free money advice and budgeting service,mainly to low income families who are in debt or who are at risk of getting into debt.

• Facilitate low income families to develop the knowledge and skills they need to avoidgetting into debt and to deal effectively with debt situations which arise.

• Identify sources of credit that best meet the needs of the target group and facilitatethem to access these sources.

• Highlight changes in policy and practice that need to be implemented at local andnational level to eliminate poverty and over-indebtedness.

• Contact creditors on a person’s behalf where necessary.

MABS also provides information and general advice to people in debt or in danger of getting

into debt through their website www.mabs.ie and the MABS Helpline 0761 07 2000 Monday to

Friday 9.00am to 8.00pm.

This guide to money management is designed to help you plan your finances and assist you inreaching affordable agreements with those you owe money to.

We would welcome your views and comments on how we could improve this guide.

Please contact us at:

FEEDBACK

MABS National Development Ltd

Commercial House,

Westend

Blanchardstown,

Dublin 15

(c) 2007 MABSndl


MABS 2

Index 3

Introduction 4

Being in financial difficulty 4

4 steps to money management 6

STEP 1 – Assessing your situation 8Write that letter 8

Priority debts 9

Secondary debts 9

To do list 10

Debt assessment sheet 11

STEP 2 – Working out your budget 12

How to work out a personal budget 13

How to fill out your personal budget 13

Increase your income 17

Reduce your outgoings 18

To do list 22

Personal budget sheet 23

STEP 3 – Dealing with your debts 26

How to make an offer (priority debts) 26

How to make an offer (secondary debts) 27

To do list 28

STEP 4 – Managing your payments 29

How to pay creditors 29

If you miss a payment 30

If your situation changes 30

To do list 30

Appendix 31-38

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Page


MABSMoney Management Guidefor budgeting and dealing with debt

Introduction

If you are in financial difficulty then this self-help guide is foryou.

If you follow the four steps outlined, it will assist you toregain control of your finances and enable you to plan for thefuture.

It can often be difficult to know where to start, particularly if youowe money to a number of financial institutions.

So, you may find it helpful to approach your money problems one step at a time.

The following steps aim to help you to first take control of your money and then stay in control.

Being in financial difficulty

Q. Am I in financial difficulty?

A. Consider yourself to be in financial difficulty if there is an imbalance betweenyour income and expenditure i.e. when spending exceeds income and the shortfallcannot be made up out of your available resources.

How do I know if I am in financial difficulty? • Are you worried about money?

• Is there not enough to go around?

• Are you borrowing from Peter to pay Paul?

• Are you afraid to open letters?

• Have you made promises of payment to creditors you know youcannot keep?

• Have you cut back on some essentials like food and heat?

If your answer is yes to one or more of the above then this guide is for you.

We know that having financial problems can be a difficult, lonely and sometimes desperate place to be.

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However

Debt problems are, more often than not, solved with time and effort.

You have probably taken the most important and difficult step in recognisingthat you might have a financial problem.

We are here to take you along tried and trusted steps that should assist youwith your present difficulty and help you come to affordable agreements withthose to whom you owe money.

Your money difficulties may have arisen for various reasons.

The most common reasons in our experience are:

• illness• unemployment• relationship breakdown• a drop in income• increased expenditure• just not enough money to go around• lifestyle spending

There are more people than you think experiencing problems with money.

Our experience is that money difficulties can affect everyone from high-incomeearners to people on low income.

Money difficulties can affect people’s health and overall wellbeing.

So if you are worried about money, you are not alone.

By following our tried and trusted steps you will take control and stay in control ofyour money.

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6

4 steps to money management and dealing with your debt

Each step is important to takeif you are to successfully put your finances in order


Step 2[page 12]

Step 3[page 26]

Step 4[page 29]

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Step 1[page 8]

Working out your budget

Dealing with your debts

Managing your payments

Assessing your situation


8

Assessing your situation

This section helps you to:Understand the difference between priority and secondary debts.

Contact those you owe money to.

Highlight the debts for which legal action has already taken place and markthose for which you are due to go to court. These debts need your immediateattention – if you ignore them, the consequences could be severe. Because theyneed immediate attention, they are called your priority debts.

Realise that if you owe arrears your credit rating will be effected, you could receive a court summons, face goods being repossessed or be threatened with disconnection of electricity, gas or telephone services.

Assess your situation by filling in the Debt Assessment Sheet on page 11.

Write that letterRemember to:

1 write to a named person if you know one

2 make sure it is to the proper address

3 check that you have quoted the correctreference number

4 keep a copy for your file

• See sample letter on page 10

Step 1

It is very important that you contact those to whomyou owe money, withoutdelay, to explain your financialsituation.

You can do this in person, byphone or by letter. Our adviceis to make contact by letter.Remember to keep a copy.


Priority debts These are debts where if you fail to pay:

Your home may be at risk if you miss mortgage repayments: Remember: ifyour family home is used as security for a loan, you are taking out a mortgageon it. Mortgages are often called housing loans.

You may be evicted: If you fail to pay your rent you may be in danger of beingevicted. Not paying rent is a serious matter.

Your electricity or gas may be disconnected: If you do not pay these bills,you may be disconnected. The reconnection costs can be high.

You may have to pay a fine or go to prison: You may be fined for not havinga television licence or other offences. You must treat a fine as a priority debt,as you could be sent to prison if you do not pay it.

Secondary debts These are debts where you have received a loan, but you haven’t given anysecurity for it.

Examples include:

• credit card debt• personal loans with finance companies• bank overdrafts• personal debts to friends and family• debts to mail-order companies• credit sales agreements• moneylenders

You can be taken to court if you have failed to keep up the agreedrepayments. However, as long as you don’t ignore the problem and yourespond to court documents with details of your financial circumstances, youwill generally only have to pay what you can afford in line with your budget.

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Your

to-d

olis

tSample letters

Initial contact to creditorAddress

Date

Re Account No.:

Dear

I am writing to you regarding the above account to inform you that I am currently

experiencing financial difficulties and am trying to resolve them.

I am at present assessing my full financial situation, using the MABS Self-Help Guide,

and working out how much I can pay each of my creditors taking into account all of my

living expenses and commitments.

While I am doing this, it would be of immense help to me if you would put a hold on any

action being taken to recover this debt and if you would suspend any interest and other

charges currently being added to this account.

I will contact you again within two weeks with my proposal.

May I take this opportunity to thank you in advance for your co-operation.

Yours sincerely

Mr/Ms ____________________

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• List all your debts

• Check that you are responsible for the debt. Is it in your name?

• Identify the debts needing your immediateattention

• Contact those you owe money to (preferably in writing)

• Check to see if your debt is statute barred i.e. see if the creditor can legally collect thedebt


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Your debt assessment sheet

Priority debts

Priority creditors

Secondary debts

Secondary creditors

Amount of debt

Amount of debt

Arrears

Arrears

Action taken by creditor

Secondary d

Action taken by creditor


Working out your budget

This section helps you to:work out a budget

fill in a budget sheet

prioritise your spending

possibly increase your income

What is a budget?There is nothing mysterious about a budget. It’s simply a plan for the money youexpect to receive and how you intend to spend it or save it.A budget is important because it will show you:

• how much money is coming into your household

• how much money is going out

• how much you can afford to offer those you owe money to

• how you can best plan your spending in the future

• how much you can afford to save

In the following pages you will find information and a budget sheet that will helpyou draw up your personal budget:

• How to work out a personal budget (page 13)

• A personal budget sheet (pages 24 and 25)

• A spending diary is enclosed and is alsoavailable on our website.

• Increasing your income (page 17)

• Reducing your outgoings (page 18)

There is an interactive budget sheet onour website

www.mabs.ie

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Step 2


How to work out a personal budget

A personal budget is an essential tool to help you tackle debt problems and manage yourmoney into the future. The following pages will help you work out how much you havecoming in and what you are spending.

You can then see how much you have left over to pay your debts.

You can start to record this information on your personal budget sheet.

Why should I do a personal budget?

Working out a personal budget is important because it helps you:

• see how much money is coming

into your household

• see how much money is going out

• see how much money you have left

• work out affordable offers to creditors

• plan your future spending

• separate living needs from credit commitments

As you go through this guide you will gradually collectthe facts you need to fill out the personal budget. Jotdown rough notes of your details and you can thentransfer this information to the proper personal budgetsheet.

How to fill out your personal budget sheet - The road map

On pages 24 and 25 you will find a budget sheet which is divided into six sections withexplanatory notes for each section.

The first three sections of the budget sheet are used to work out your income andspending and to learn if there is any money left to pay your creditors.

Use the information in the sections below to help you work out your income and spending.

Section 1: Your total income is added up in Box A.

Section 2: Your total outgoings or spending are added together in Box B.

Section 3: To find out how much money you can offer your creditors, take awayyour total spending (Box B) from your total income (Box A). If yourincome is more than your spending, you have an amount of money forcreditors (Box C).

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Remember

Weekly or monthly?Remember to fill in eitherweekly or monthly figures onyour budget sheet – whicheversuits you best. To work out aweekly payment on a monthlybasis, multiply the payment by52 and divide by 12.

However, don’t mix weekly andmonthly figures. Stick to one orthe other when filling in yourbudget sheet.


Notes to help you complete sections 1, 2 and 3

Section 1: IncomeAdd up the income for you and your household.

Include wages and salary after deductions. Onlyinclude overtime if it’s regular. Check that you arepaying the right tax amount and claiming all your taxcredits. For instance you can claim for eligible medicaland dental expenses using the MED 1 or MED 2 form.Contact your local regional tax office at the Lo-Call 1890number. The numbers are in the phone book or go to www.revenue.ie

Include social welfare benefits, including Child Benefit.

Contributions from other people who live in your home such as grown-upchildren (known as non-dependants). Try to make sure that any non-dependantis paying enough towards the household expenses

If you are on a low income, you may be entitled to money you are not claiming,suchas Living Alone Allowance or Family Income Supplement. Check with your localCitizens Information Centre for details or see page 17.

If you are sick or disabled, you may be able to claim a range of disability benefits.Check with your local Social Welfare Office or Citizens Information Centre.

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Scribble box


Section 2: SpendingWork out how much you (and those you live with) need to spend each week on basicliving spending. At this stage don’t include any debts or arrears or loan repayments.

Mortgage Rent Education Medical expenses

Housekeeping: including food, toiletries, cleaning materials and so on.

Gas and electricity: bills are issued every two months. Look at your last bill. Multiplyit by 6 to get an annual amount. If you’re preparing a weekly budget, divide by 52 andif it’s monthly, divide by 12. For a more accurate weekly or monthly average contactyour supplier and request last year’s consumption costs. Then divide as above formonthly and weekly costs.

TV licence: this is a priority payment because you can be fined if you do not holda current licence. Divide the cost of the licence by 12 or 52 depending on whetheryou are budgeting monthly or weekly.

Cars on hire purchase: you will need to include these payments in your spendingor you may lose the car.

Clothing: if you have children, don’t forget the cost of school uniforms, schoolactivities, school trips, etc.

Telephone: only include your bill if you are still connected. If you have beendisconnected, treat the bill as a secondary debt.

Now is a good time to consider using the free MABS Spending Diary.

Remember

It’s your budget

Your household’s outgoings and the amount you spend may arise because of your particularcircumstances, a special diet, extra transport costs due to living in a rural area. It is yourpersonal budget, so the figures should be your own. Be careful! If you don’t take into accountall these expenses you may find it difficult to stick to any long term repayment plan. This couldlead you into further difficulties.

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Scribble box


Section 3: Money available for creditors

This is calculated by subtracting your total spending from your total income. If yourincome is more than your outgoings, you have an amount of money for creditors(Box C) on the personal budget.

Is your spending more than your income?If your spending is more than your income you should:

• check whether you are entitled to extra benefits such as Living Alone Allowance or Family Income Supplement (see page 17).

• check that you are spreading out payments on your household bills, so youdon’t have to pay bills all at once (your gas, electricity and oil suppliershave budget payment schemes).

• see if you can cut down on any of your outgoings, but try not to cut downon basics such as food, heating and electricity unless you feel you arespending excessively in these areas.

If your spending is still more than your income after checking these things, contactthe MABS helpline at 0761 07 2000 or your local money adviser.

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Scribble box


Increase your income

People sometimes experience money problems because they are not receiving allthe money they are entitled to. See below for information and suggestions on areasthat might increase your income.

1 Tax: Your local tax office will advise you about the credits you can claim given yoursituation. You can also visit the Revenue’s website, www.revenue.ie

2 Social Welfare: Your local Citizens Information Centre (CIC) can help you check thatyou are claiming all your entitlements whether you are working or not. You can alsoget information from the following websites: www.citizensinformation.ie or fromthe Department’s own website www.welfare.ie

3 Supplementary Welfare Allowance Scheme: These payments are run by theDepartment of Social Protection representatives (formerly Community WelfareOfficers) who are generally based in your local health centre or clinic. Some of thesepayments need you to meet certain conditions – again your local CIC can tell you whatthese are.

4 Insurance: Check to see whether any of your loan repayments are covered bypayment protection insurance. You may need to write for the terms and conditionsof your policies and a claim form.

5 Employment: There are various legal provisions on wages, dismissal, equality andredundancy that may mean you are owed money by your employer or previousemployer. If you think this applies to you call CIC Helpline 0761 07 4000 (Mondayto Friday, 9am to 8pm) or visit the Department of Jobs, Enterprise & Innovation'swebsite, www.djei.ie.

6 Back to Work Schemes: You can get information on the various schemes throughyour local CIC or call their helpline at 0761 07 4000 or visit the Department of Socialprotection website www.welfare.ie

7 Welfare funds: Certain large employers may have schemes in place to assistemployees (or past employees) who are experiencing financial difficulty.

8 Second job: Perhaps you could take up a second or evening job in the short term tohelp you put your financial affairs in order.

9 Renting a room in your house: You may be entitled to earn tax free income by rentinga room in your home - see www.revenue.ie for details.

– See Appendix 4 for more contact details (pages 35, 36, 37)

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Reduce your outgoings

Try and identify areas of your spending where you could cut back on youroutgoings.

With your budget in front of you, see if the following plan might help:

Put a mark against payments that you cannot change, for example: your rent.

Look at services that you could economise on, for example: electricity, gas ortelephone.

If your electricity and gas bills are very high, ask about energy efficiency from theSustainable Energy Authority of Ireland at www.seai.ie or ask your electricity or gassupplier.

You may be able to negotiate lower mortgage payments or shop around for cheaperinsurance (see hints on negotiating – page 31).

Now consider how you might budget for essential weekly spending on groceries,housekeeping, clothing and so on. You might find that keeping a daily spendingdiary for a short while is useful, as it will give you a clear idea of where your moneyis going and where you might be able to save. (see Spending Diary enclosed withthis guide or on our website, www.mabs.ie)

Look at other items such as entertainment.Although you might again decide to makecutbacks here, do try and leave room for asocial life for you and your family.

Look at an amount in your budget thatyou need to put aside for dealing withunexpected expenses that may crop upor for education costs, emergencymedical bills and so on.

Shop around for the best value in goodsand services and the lowest interest rates.

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Section 4: Priority debtsWhat are priority debts?Some debts are more important than others. Important debts such as mortgage arrears, rentarrears, fines and maintenance payments are called priority debts. Mortgage and rent arrears areparticularly important because you could lose your home if you do not pay them. You can bedisconnected if you do not pay your electricity or gas bill. If possible, try and pay the current billbefore the next one is due. Use your personal budget sheet to support your offer of payment. Thismust cover your usage and an amount off the arrears. Even if the company does not agree to youroffer, start paying what you have offered immediately. Do not offer to pay more than you canafford towards the arrears.

Court finesYou may have a fine for not having a television licence or other offence. You must treat a fine asa priority debt because you could be sent to prison if you do not pay. If you have to go to court,take a copy of your personal budget with you.

Hire PurchaseYou may have bought your car through a hire purchase agreement. Check your agreement. Withhire purchase you do not own the car until you have paid the last instalment. If you fall behind withyour payments, the creditor may be able to repossess the car. If you have paid more than one thirdof the total you owe, the creditor cannot repossess the car unless they obtain a court order. Thismeans they cannot just come and repossess the car. If you have paid half the payments and youhave looked after the car, you can usually return it without further payments.

If it is important to you to keep the car e.g. you need the car for work, you may need to includethe payments on the expenditure section of your personal budget and treat this as a priority andnot a secondary debt. Be prepared to explain to creditors why you need to retain the car.

What to offer?Housing and utility creditors: Offer an amount on top of your normal payment to clear arrearsover time.

Other priority creditors: You may need to clear arrears over a fixed time, so you will need to workout your weekly or monthly proposals on this basis.

If possible try not to use up all of your surplus money on offers to your priority creditors so thatyou still have some left over for your secondary creditors.

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Scribble box


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Scribble box

Section 5: Money left over for secondary debtsYou work this out by subtracting the total of your payments to priority debts from the totalyou have for creditors. If you have money available, you can use it to pay your secondary debts (Box E).

Section 6: Secondary debts

What are secondary debts?These include lots of different types of debts where the creditor does not have extra powers –for example they cannot take your home. The most common secondary debts include:

• credit card debts

• personal loans with finance companies

• bank overdrafts

• personal debts to friends and family

• catalogue debts

• credit sales agreements

• money lending loans


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After Section 5 in your personal budget sheet you should have a “money for secondarydebts“ amount to divide among your creditors in Box E. If you have something left, thebest way to divide it among your creditors is called a pro-rata distribution. This just meansthat the largest debts get the largest portion of money and likewise, the smallest debts getthe least. The more you owe a creditor, the more they should get from the money youhave available. You should use a calculator to work out your payments and try to followthis example of how pro-rata payments are calculated.

Interest and chargesWith credit cards, overdrafts and some loans, interest is charged on the amount you owe,meaning that your debt grows every month. Your debts will grow if your new monthly offerof payments is lower than the interest being added. Ask the creditor to freeze all interestand charges on your debt to give you a chance to deal with your debt. The creditor mayagree to this or may suspend the interest and charges for a period. Ask for regularstatements and check them. When a creditor accepts your offer, if they do not stateinterest has been frozen, you should check this with them again. The creditor may also tryto apply administration and late payment charges, but you should ask for these to bedropped.

Scribble boxCalculation box

Section 6

Money for secondary debts (Box E) X each debt ÷total amount owed (Box F) = offer to the creditor

Example household

John and Mary have €35 to divide between 3creditors, i.e. their total offer for all their

secondary debts is €35 per month (Box E)

John and Mary owe:

Fashion catalogue €210.00

Flexi credit card €1500.00

Easi Bank loan €1803.00

Total €3513.00 (Box F)

Using the formula

Single debt X Total offer Total debt

The calculations are as follows:

Fashion catalogue 210 x 35 = €2.093513

Flexi credit card 1500 x 35 = €14.953513

Easi Bank loan 1803 x 35 = €17.963513

Total offer = €35.00


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What if there is no money left to pay creditors?After paying your outgoings and making arrangements to pay your priority debts, theremay be nothing left to pay other creditors. If you have nothing left, say so. Show yourcreditors by sending them proof of income, your financial statement and a letter to back thisup. Ask your creditors to hold action until your situation improves. This is called asking fora “moratorium” or ‘payment holiday’.

Check the name on your agreementOnly the person who signs an agreement is responsible for the debt. A husband andwife are not responsible for each other’s debts unless they both sign theagreement.

If you take out an agreement jointly with another person, you are each responsiblefor the whole debt and not just part of it. Make sure the creditor knows thatsomeone else is also responsible. Check your credit agreement carefully. If you don’tunderstand the terms or want to check that the agreement is in the correct formatand that you are responsible for paying back the debt, check with the FinancialRegulator Consumer Helpline at lo-call 1890 77 77 77 or visit the websitewww.consumerhelp.ie, or contact the MABS helpline at 0761 07 2000 or visit theMABS website www.mabs.ie

Payment protectionCheck your credit agreement carefully to see if you have payment protection insurance.Payment protection insurance may cover your repayments if you have an accident or aresick and can’t work. Your policy may also cover you if you are made redundant. Check theterms and conditions of your policy.

What if a creditor refuses the offer?Sometimes one or more of your creditors will refuse to accept the offer of paymentfrom your personal budget and demand more than you can afford. Sometimes theyrefuse to freeze the interest. If a creditor accepts your offer, double check that theyhave frozen the interest if they do not state this in their letter.

If your creditor refuses your offer at first, don’t give up. You can usually persuadethem by using the following:

Start paying the amount you have offered anyway as a gesture of goodwill.

Write to the creditor again and ask them to reconsider.Tell them your offer is reasonable and is all you can afford at the moment.

If some of your creditors have accepted your offer of payment, and/or havefrozen interest, do make the other creditors aware of this if they arehesitant in accepting your offer.


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Personal budget sheetINSTRUCTIONS FOR COMPLETING YOUR BUDGET SHEET

• The Budget sheet overleaf is for your own personal use to helpyou get an overall picture of your income & expenditure.

• Complete the figures either on a monthly or a weekly basis

• Make sure that you include absolutely everything that you spendmoney on

• Add all the sub-totals in the shaded boxes to get a total figure foryour income and a total for your expenses

• A Financial Statement is enclosed and is also available on ourwebsite.

• Carry forward the totals (shaded boxes) from your Budget sheetto this Personal Financial Statement

• Follow the steps given on pages 12 to 16

• List all your debts on the debt assessment sheet provided


• Identify the debts needing your immediate attention

• Contact immediately those to whom you owe money, preferablyin writing

• Check your social welfare entitlements

• Download the budget sheet from our website. Use the one provided inthis guide or make up one yourself

• Fill in a budget as accurately as possible

• Do a spending diary for a week or two. Use the spending diaryprovided at the beginning of this guide

• Check if your income tax affairs are up to date. When did youlast fill in a tax form?

• Subtract your spending from your income to see what you canafford to give to your creditors

Your

to-d

olis

t


My Budget Sheet (Weekly or monthly)

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SECTION 1 Income

WAGES/SALARY

My Earnings (net)

Partner's Earnings (net)

Non-Dependant(’s) Contribution

Total Wages/Salary

SOCIAL WELFARE PAYMENTS

My S/W Payment

Partner's S/W Payment

Other e.g. Rent Supp/FIS

Total Social Welfare Payments

PENSIONS

Mine

Partner

Other

Total Pensions

Child Benefit

OTHER INCOME

Maintenance

Boarders/Lodgers, etc

Back to Education Allowance

Student Grant

Other

Total Other Income

Total Income Box A €

SECTION 2 Expenditure

HOUSING COSTS

Rent

Mortgage

Mortgage Protection Insurance

Building/Contents Insurance

Property Tax

FOOD/HOUSEKEEPING

Groceries

Milk & bread

Nappies/baby

Work/school lunches

Other

Total Food/Housekeeping Continues

UTILITIES

Electricity Usage

Heat/Fuel Usage

TV Licence

Waste Charges

Water Charges

TELEPHONE / OTHER UTILITIES

Landline

Mobile

TV/cable/sat

Internet

Total Telephone / Other Utilities

OTHER IMPORTANT ITEMS

Other 1

Other 2

Life Insurance

Pension

Total Life Insurance & Pension

TRANSPORT COSTS

HP Agreement (CAR)

Work

School

Road Tax

Insurance

Petrol

NCT/Maintenance

Parking/Tolls

Other

Total Transport Costs

EDUCATIONAL COSTS

School/College Books

School/College Uniforms

School Fees/Contributions

School Trips

Other Ed. Costs

Total Educational Costs

OTHER COSTS

Childcare

Savings

Clothing/footwear

Total Other Costs


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MEDICAL COSTS

Dentist/Optician

Doctor's Bills

Medication

Health Insurance

Other

Total Medical Costs

REPAIRS & MAINTENANCE

Repairs to Property

Household Maintenance

Other

Total Repairs & Maintenance

OTHER EXPENDITURE

Hairdressing/Haircuts

Children’s pocket money

Other Appliance Rentals

Family Outings

Lotto

Hobbies/Pets

Gifts (Christmas, B’days)

Membership/Profess. Subs

Cigs/alcohol

Other

Total Other Expenditure

Total Expenditure Box B €

SECTION 3

Total income Box A €

Take away

Total expenditure Box B €

Money for creditors Box C €

SECTION 5

Money for Creditors Box C €

Take away

Total priority debts repayment Box D €

Money for secondary debts Box E €

SECTION 4

PRIORITY DEBTS

Rent Arrears

Mortgage arrears

Property Tax Arrears

Electricity Arrears

Water Charges Arrears

Loans secured on House

Other secured Loans

Instalment Orders

Court fines

Family Maintenance

Hire Purchase for Car

Other Priority Payments/Liabilities

Total priority debts repayment Box D €

SECTION 6

SECONDARY DEBTS

Creditor Balance owed

1:

2:

3:

4:

5:

6:

7:

8:

Total owed Box F €

Total monthly repayment Box E €

Payment offered

Payment offered Balance owed

Scribble box


Dealing with your debts

Before dealing with your secondary debts, make sure you have already dealt withthe priority debts (see page 11).

How to make an offer - priority debtsSend a letter and a copy of your financial statement to each priority creditor. See Appendix1 for a copy of a financial statement. In your letter:

give the account number or reference number.

explain why you are in financial difficulties, for example: sickness, unemploymentor relationship breakdown, etc.

say when you will be able to start payments and for how much. Offer only whatyou can afford on top of your normal payment.

ask your creditor to suspend interest and other charges if appropriate.

Tell your creditor that you have followed the MABS Self-help Guide or the MABSwebsite www.mabs.ie in working out the proposal.

If your offer is acceptedIf your offer is accepted make sure you get the acceptance in writing. Do write andthank your creditor for their co-operation and inform them of the method ofpayment you intend to use (see Step 4).

If your offer is not acceptedWrite again to your creditor asking that your offer be reconsidered. Also informyour creditor if other creditors have accepted what you offered.

Start paying based on the offer you have made.

If your creditor is refusing to freeze interest and other charges, point out that youroffer was based on interest being frozen, otherwise the debt will not reduce.

If your creditor persists in refusing the offer you have made, they must go to courtto get their money back. (see Info on Courts).

If you have made a hire purchase agreement and you have paid back one third ofthe loan, your creditor cannot repossess the goods automatically. (see Info on HirePurchase - Page 19).

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Step 3


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Other debtsAs with priority debts, you are best off dealing with creditors in writing, enclosinga copy of your personal budget sheet. Some creditors may have sent the debt to acollection agency. If that has happened then write to the agency and send a copyto your creditor. See secondary debts on page 11 for more information.

How to make an offer - secondary debtsContact your secondary creditors as soon as possible toexplain the situation.

When prepared, send each of them your personalbudget sheet to help persuade them to acceptreduced payments that you can afford.

Ask them to suspend any interest and other charges to help you get your finances undercontrol more quickly.

If you have no extra money to offer, send thecompany a copy of your personal budget sheet and askthem to hold legal action and freeze any interest and chargesto see if things improve in three or six months time.

Tell your creditor that you have followed the MABS Self-help Guide or that youhave contacted the MABS Helpline when working out the proposal.

If your creditor takes you to court, tell the court the same thing.

If your offer was acceptedIf your offer was accepted make sure you get the acceptance in writing. Do writeand thank your creditor for their co-operation and inform them of the method ofpayment you intend to use (see Step 4).

If your offer was not acceptedWrite again to your creditor asking that your offer be reconsidered.

Point out if other creditors have accepted what you offered.

Start making the payments that you propose.

If your creditor is refusing to freeze interest and other charges, point out that youroffer was based on interest being frozen, otherwise the debt will not reduce.





• Contact immediately those to whom you owe money, preferably in writing


• Check if your income tax affairs are up to date. When did you last fill in a taxform?

• Download the budget sheet from our website, use the one provided in this guideor make up one yourself


• Do a spending diary for a week or two. Use the spending diary provided at the beginning of this guide

• Subtract your spending from your income to see what you can afford to give to your creditors

Your

to-d

olis

tSample letters

Letter of OfferAddress

Date

Re Account No.

Dear

Further to our recent correspondence, I am writing to advise you that I have now completed

a full assessment of my current financial situation taking into account all of my living

expenses and commitments.

In my efforts to address my situation I have used the MABS Self-Help Guide to work out

affordable proposals.

As a result I am now putting forward an offer of €________ per week/month as being

realistic in my current circumstances. If my circumstances change and I can increase this

offer, I will contact you immediately.

In the meantime, I hope this proposal will be acceptable to you. I would be grateful if you

would suspend any interest and other charges being added to the account to help me

resolve my difficulties as soon as possible.

I look forward to hearing from you.Yours sincerely

Mr/Ms ____________________

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29

Managing your payments

Tips for making paymentsOnce you have drawn up a budget and decided how much topay to cover living costs, arrears and credit commitments, thekey to staying in control is to find the cheapest and mostconvenient way to pay as many debts as possible when youreceive your weekly or monthly income.

1 Choose a method that is less time consuming. Do, ifpossible, set up an account where you can deposit an amountweekly or monthly to pay all your utility bills and other creditagreements.

2 If you are paid weekly, budget weekly. Put aside the weekly portion ofthe amount you will need to pay the bills that come in every month, two months oryearly.

3 Choose a method of paying your bills that is the most convenient. Choose a service thatis near where you live or work.

4 Shop around for the cheapest method. Some services charge a fee.

How to pay creditorsDirect debitYou can decide to pay your mortgage and other bills through a direct debit facility in yourbank. Some banks charge a fee so shop around for the lowest charges.

Internet bankingOn the Internet you can set up a facility to pay your gas and electricity bills as well as yourcredit card and loan repayments. Your bank or utility supplier will give you the informationnecessary to set up this payment system.

Bill payThis is a free service for paying your bills at your local post office. Enquire at your localpost office for more details.

Household budget schemeIf you get a payment from the Department of Social Protection (DSP) you will have theoption of paying your local authority mortgage or rent through An Post and have themdeducted directly from your payment before you receive it. You can also pay some utilityand phone bills this way. This scheme is available to many types of DSP payments, but notall. Check with your local DSP office. You can only have up to a quarter of your weeklysocial welfare payment deducted for bills.

Step 4





• Contact immediately those to whom you owe money, preferably in writing


• Check if your income tax affairs are up to date. When did you last fill in a tax form?

• Download the budget sheet from our website, use the one provided in this guide ormake up one yourself


• Do a spending diary for a week or two (you can get a free spending diary bycontacting MABS)

• Subtract your spending from your income to see what you can afford to give to yourcreditors

• Divide your debts into primary and secondary debts if you have not already done so

• Decide how much you can afford to give to each creditor

• Write to each creditor making an offer of the amount, and only the amount, you canafford

Your

to-d

olis

tIf you miss a payment

1 If you know in advance that you are likely to miss a payment, you should inform yourcreditor about this.

2 If you miss a payment, contact your creditor immediately.

3 Give the reason why you had to miss the payment.

4 Promise to make up that missed payment in full on the next payment date or request thatthe missed payment be spread over a few payments.

If your situation changesIf your situation changes and you are unable to keep to the payment plan you have agreedwith your creditors, contact them immediately, preferably by letter or email.

Outline the detail of your new situation, how long it is likely to last and how much you cannow offer.

Ask for this new offer to be accepted for a set period (say, three or six months).

If you have been paying by direct debit or standing order, be sure to cancel it or re-organiseit to reflect your changed circumstances.

If your circumstances change for the better and you can pay more, contact your creditorswith an improved offer.

30


Appendix 1Negotiation tips

Before negotiating, it is always good to be prepared. Here are some suggestions that will helpyou achieve a positive outcome:

1 Contact your creditor by letter, email, fax or face to face rather than by phone.

2 Be prepared - have your facts and figures at hand.

3 Know what you can afford to pay and do not agree to pay more.

4 Do not adjust offers in line with creditor demands. Restate that your offer is based on yourability to pay.

5 Present yourself and your situation in a non-aggressive manner.

6 Be open and honest about your situation.

7 Be polite and accommodating and as flexible as possible.

8 Do not become frustrated – stay calm at all times.

9 Get everything you have agreed upon in writing.

10 Emphasise the mutual benefits of affordable agreements that youcan stick to.

11 Assure the creditor that if your circumstances change you will revise your situation withthem immediately.

12 Ask the creditor to suspend interest and other charges to help you put your finances inorder.

13 If your negotiation is not proving successful, ask if you could contact someone more senior.

14 Advise reluctant creditors of other acceptances. Look, if necessary, for short-termacceptance of your proposal (say, 3 to 6 months).

15 Do not be afraid of court action and always attend when required. Courts can besympathetic to genuine difficulties

31


Appendix 2The legal system – debt casesThe information given below is but a guideline and not to be taken as legal advice.

The person who owes money (the defendant) is referred to as the debtor; the person whowants to be paid (the plaintiff) is referred to as the creditor.

The district court deals with disagreements over debts of up to €15,000

District Court SummonsThis is the first document. It will contain the agreement and the amount the creditor saysyou owe. It will contain a date for the hearing of the case if you wish to defend (but onlydefend if you are sure you don’t owe the amount). If you wish to defend, you must returnthe form supplied to the court and to the creditor’s solicitor. If you do not do this, the casewill not be heard in court, but it will be accepted that you admit to owing the amountstated.

DecreeIf you do not defend your case, judgment is given against you and you must pay the totalamount stated on the Decree (Court Order). The creditors can also charge continuinginterest on any remaining debts, but it can only be charged at 8%. This is called the‘Courts Act’ interest and is the only interest that can be legally charged. The creditor cantake steps to recover the amount owed. This is known as Enforcement Procedure

Enforcement proceduresAt this stage, a creditor can still be contacted to try to negotiate a realistic way of payingback the debt. There are a number of options open to the creditor when attempting torecover the amount owed to them.

[a] Registering Judgment (Stubbs)

The creditor can register judgment, which means that your name and description of thedebt will appear in Stubbs magazine. It will also be a public record in the court officewhich can be found if a search is requested. This option means that your future creditrating will be affected. Once the debt is paid the debtor can arrange to have it noted onthe record.

[b] The Sheriff

The sheriff can come and take goods belonging to the debtor and in some situationsthose of the family to the value of the debt owed. They may not seize goods that are onhire or on lease. The sheriff has the power to force entry to the house if they are notallowed to enter peacefully. In general, they do not seize household necessities such asclothes or bedding.

32


[c] Instalment Order

This is an order where the court decides how much has to be paid in regularinstalments. You will get a summons to attend court to outline your means. A statementof means should be sent to the court and the creditor before the court date.If you do not go to court, the judge will have to make a decision without hearing yourcapacity to pay. In that case, the judge may decide that you pay the debt in oneinstalment. It is extremely important to attend the court to outline your financialsituation. You are ordered to make the payments that the judge sets out. If yourfinancial situation changes and you cannot afford to pay the amount set out, you canapply for a variation of the Instalment Order.

[d] Committal Order

If you do not keep to the instalment order, the creditor can apply to the courts for asummons on application for your arrest and imprisonment (committal order). If you donot attend court, the judge will make a committal order ordering you to be sent toprison. However, if you do attend and explain why you didn’t pay, the judge may vary theinstalment order. It is extremely important not to ignore a committal summons.

If an order for arrest and imprisonment is made, the gardai will be informed and canarrest you. If a creditor accepts a payment at this stage, they may not be able to enforceimprisonment. It is important to get a receipt if you make any payment after the dateof the committal order. If you are imprisoned, it is important that your family or friendscontact the creditor and arrange payment to set aside the order. You may also bereleased if all remaining amounts are paid to the court clerk or the governor of theprison.It is important to note that imprisonment was for contempt of court because you didnot comply with the order from the courts, so when you are released you will still owethe debt. The creditor can take action to recover the debt.

[e] Judgment Order

This order is put on any property owned (even with a mortgage). This means that theproperty is a guarantee that the debt will be paid. In some cases the creditor can orderthe sale of the property so that they can recover their costs.

33


34

Appendix 3Seven Golden Rules

For dealing with your money problem

There are seven tried and tested rules in dealing with a money problem. If youfollow these, you won’t go far wrong.

Rule 1

Don’t ignore it – it won’t go away and the longer you leave it, the worse it gets.

Rule 2

Don’t rush to borrow your way out of the problem without thinking carefully andseeking independent advice. Borrowing may only be storing up greater difficultieslater on. You could end up losing your home.

Rule 3

Contact everyone you owe money to immediately, preferably by letter, letting themknow of your difficulty and asking for time to assess your situation.

Rule 4

Check your rights and entitlements. You may find for example that your loanrepayments are insured against sickness, redundancy etc. Contact the FinancialRegulator and they will tell you how credit companies must operate by law.

Rule 5

Be open and honest with the people you owe money to. Show them a copy of yourhousehold budget so that they can see what you can realistically afford.

Rule 6

Always attend court hearings and take a copy of your personal budget with you andexplain your situation.

Rule 7

Keep copies of all letters and forms you send and receive.


Appendix 4Useful Contacts

AIM FAMILY SERVICES

Smithfield Business Centre, The Distillers Building, Dublin 7 (01-670 8363)

• Legal information, mediation and counselling service for couples

experiencing marital and family problems

CITIZENS INFORMATION CENTRES

(nationwide)

• Local free confidential information on a range of rights, entitlements

and services. Centres are listed in the Golden Pages and on their

website www.citizensinformation.ie

CITIZENS INFORMATION CALL CENTRE

0761 07 4000 ( Monday to Friday, 9am to 8pm)

• The statutory body responsible for providing information, advice and

advocacy on social services

COMMISSION FOR COMMUNICATIONS REGULATION

Block DEF, Abbey Court, Irish Life Centre, Lower Abbey St,

Dublin 1 (LoCall 1890 229 668)

• The independent body responsible for licensing and regulating the

electronic communications sector and postal industry

COMMISSION FOR ENERGY REGULATION

The Exchange, Belgard Square North, Tallaght, Dublin 24 (Tel: 01-400 0800)

• The independent body responsible for overseeing the gas, electricity and waterindustry.

35


ENERGY ACTION LTD

Unit 14, Newmarket, Dublin 8 (01-454 5464)

• Energy efficiency information and services for older people in the Dublin area only

FINANCIAL REGULATOR

The Financial Regulator is an independent watchdog set up by the Government to regulate firms that provide financial services

and help you make informed decisions about your personal finance.

Phone in: Consumer help-line lo-call 189077 77 77

Log in: www.consumerhelp.ie

[email protected]

Drop in: Information Centre, 6 – 8 College Green, Dublin 2

FAMILY MEDIATION SERVICE

- Dublin: 1st Floor 5, St Stephens Green House, Earlsfort Terrace, Dublin 2 (01-634 4320)

- Cork: 3rd Floor, Hibernian House, 80a South Mall, Cork (021-425 2200)

- Galway: 1st Floor, Ross House, Merchants Road, Galway (091-509 730)

- Limerick: 3rd Floor, Riverpoint, Lr. Mallow St., Limerick (061-214 310)

(There are also a number of part-time centres – details available from any of the above)

• A professional, free and independent mediation service

for couples who have decided to separate

FINANCIAL SERVICES OMBUDSMAN

3rd Floor, Lincoln House, Lincoln Place, Dublin 2. (Lo-call 1890 88 20 90)

E-mail : [email protected]

FREE LEGAL ADVICE CENTRES

13 Lower Dorset Street, Dublin 1 (01-874 5690)

• Runs a network of (free) part-time advice clinics throughout the

country and a telephone information and referral line

36


BANKING & PAYMENTS FEDERATION IRELAND

Nassau House, Nassau Street, Dublin 2 (01-671 53 11)

• The representative body for banks and building societies – promotes a

code of ethics for dealing with customers, including those with mortgage arrears

SUSTAINABLE ENERGY AUTHORITY OF IRELAND

Wilton Park House, Wilton Place, Dublin 2. (01-808 21 00)

• Information on energy awareness and conservation

INSURANCE IRELAND

Insurance Ireland, Insurance Centre, 5 Harbourmaster Place, IFSC, Dublin 1

(01 676 1820)

IRISH LEAGUE OF CREDIT UNIONS

33-41 Mount St, Dublin 2 (01-614 6700)

• The representative organisation for all affiliated credit unions in Ireland

IRISH NATIONAL ORGANISATION FOR

THE UNEMPLOYED (INOU)

Araby House, 8 North Richmond Street, Dublin 1 (01-856 00 88)

• Information on entitlements for the Unemployed

OFFICE OF THE PENSION OMBUDSMAN

4th Floor, Lincoln House, Lincoln Place, Dublin 2 (01 676 6002)

Email : [email protected]

SOCIETY OF ST. VINCENT DE PAUL

91/92 Sean McDermott St., Dublin 1 (01-838 69 90)

THRESHOLD (Housing Advice Agency)

- 19 St Mary’s Abbey, Dublin 7 (1890 334 334)

-8 Fr. Matthew Quay, Cork, (021- 4278848)

- Augustine House, St Augustine Street, Galway (091-563 080)

• Advice and information on matters relating to housing

37


38

Appendix 5Useful Information Leaflets on the MABS website

www.mabs.ieThis list is regularly updated on the website

BORROWING

BORROWING FOR A CAR

BUDGETING AND YOUR APPOINTMENT

DEBT RELIEF NOTICES

FACING REPOSSESSION

FUEL DEBT

MANAGING YOUR BILLS

MONEYLENDING

MONEY MANAGEMENT GUIDE

MORTGAGE DEBT AND YOUR MABS APPOINTMENT

PAYING THE RENT

PERSONAL INSOLVENCY

SAVING

SELLING YOUR HOUSE TO PAY OFF YOUR MORTGAGE

USING THE MONEY ADVICE & BUDGETING SERVICE

USING MABS


39

Disclaimer

While every effort has been made to ensure that the information

contained in this money management guide is accurate, MABSndl

accepts no legal responsibility for any errors or omissions contained

in it. If you have a specific legal query relating to matters raised in this

guide you should get detailed legal advice

Notes


visit

www.mabs.ie

March 2016


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